Georgians with gripes about banking have nowhere to go

We’ve all heard the expression: “Who’s watching the store?” But here in Georgia, a more apt expression would be: “Who’s watching the banks?” Certainly not the state agency charged with the statutory responsibility to do so, the Georgia Department of Banking & Finance. Go to their official Web site and you will find the following disclaimer, cited word for word: “Due to recent staff cutbacks, the Georgia Department of Banking and Finance no longer handles individual consumer complaints against financial institutions chartered by the state of Georgia or any other entities licensed or regulated by our Department.”

Funny, even though I am a newcomer to Georgia, in nearly five decades of teaching all areas of economics, including money and banking, as well as 12 years as manager of a regional office for a worldwide financial services firm, I had always found, and believed, that handling such individual concerns and complaints regarding banks and other financial institutions was absolutely vital. Indeed, the proper investigation and necessary action on individual complaints is what government banking departments and similar agencies are all about. It is their stock in trade. It is where the rubber meets the road, as the saying goes. Apparently, not here in Georgia. The department still audits and reviews banks, but not on the basis of individual complaints.

The banking and finance department does refer complainants to the Federal Reserve System, which from my past experience is not at all equipped to handle such matters as complaints from ordinary citizens. Any investigation by the Fed would be slow at best, and ignored at worst, not helping much.

If the state department of banking and finance needs to cope with staff cutbacks, the last area that should be allowed to suffer is the handling of individual complaints. It’s that function that alerts any professional banking regulatory agency to the possibility of fraud and abuse of the public trust by individual banks and the banking system, as well as to incompetence and just plain bad banking decisions. Georgians should protest this wrongful decision to cut funds for the department to the governor and General Assembly in the strongest possible terms.

We are all aware of the major crisis in the U.S. financial sector caused by unsound and unwise lending practices, initially with regard to so-called subprime mortgages. Of all the times for the department of banking and finance to be forced by budget cuts to bail out on its fundamental task of assisting individuals with complaints, this would have to be the worst possible moment to do so. The banking public, and that means all of us living in Georgia and using its banks, should be outraged over any funding cutbacks that significantly weaken bank regulation.

Eugene Elander, a retired professor of banking and finance, now teaches international business at Brenau University.